SETTLEMENT AGREEMENT AND RELEASE
SETTLEMENT
AGREEMENT AND RELEASE
This
Agreement (referred to herein as the “Agreement” or “Settlement Agreement”) is
made effective as December 14, 2009 (the “Effective Date”), by and between
SpongeTech Delivery Systems, Inc. (“SDS” or “SPONGETECH”) and SpongeTech,
Inc. (“STI”),
Spongeables LLC (“Spongeables” or “SLLC”) and Xxxxxxx Xxxxxxxx
(“Xxxxxxxx”). SpongeTech
Delivery Systems, Inc., SpongeTech, Inc., Spongeables LLC and Xxxxxxx Xxxxxxxx
are collectively referred to as the “Parties” and singularly referred to as
“Party.” Sponge Tech, Inc., Spongeables LLC and Xxxxxxx Xxxxxxxx are
collectively referred to as the “Defendants.”
RECITALS
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A.
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SDS
commenced an action captioned: SPONGETECH
DELIVERY SYSTEMS, INC.,
Plaintiff, v. SPONGETECH, INC., SPONGEABLES, LLC., and XXXXXXX
XXXXXXXX,
Individually, CIVIL ACTION NO: 09 CV 8398
(PKC), UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK (the
“Action”);
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B.
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Defendants
dispute the claims asserted in the Action, and contend that they have no
liability whatsoever to SDS;
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C.
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The
Parties wish to settle the Action without any admission of wrongdoing or
liability and without any payment of monies by any Party, and having
settled their disputes and the Action, the Parties now wish to further
reduce to writing the terms of their settlement
agreement.
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AGREEMENT
For good
and valuable consideration, the receipt and sufficiency of which the Parties
acknowledge, the Parties agree as follows:
Section 1.General Releases ; Notice of
Dismissal With Prejudice.
Section 1.1. SDS, on
behalf of itself and its present, past and future predecessors, affiliates,
parents, subsidiaries, shareholders, managers, associates, employees, officers,
directors representatives, agents, successors and assigns, hereby releases and
discharges the Defendants from any claims, demands and causes of action, whether
in law or equity, that arise out of or relate to the claims in the Action or
either were asserted or could have been asserted in the Action or at any time
through and up to the Effective Date of this Settlement Agreement and
Release.
Section 1.2.
Defendants, on behalf of themselves and their present, past and future
predecessors, affiliates, parents, subsidiaries, shareholders, managers,
associates, employees, officers,
directors representatives, agents, successors and assigns, hereby release and
discharge SDS from any claims, demands and causes of action, whether in law or
equity, that either arise out of or relate to the claims in the Action or were
asserted or could have been asserted in the Action at or any time through and up
to the Effective Date of this Settlement Agreement and Release.
Section
1.3. Promptly after the execution of this Agreement by the Parties, and in no
event more than five (5) business days after the execution of this Agreement by
the Parties. SDS, through its counsel, shall file with the United States
District Court for the Southern District of New York (the “Court”) a notice of
dismissal of the Action with prejudice, and with each Party bearing its own
costs and attorneys’ fees pursuant to Rule 41(a) of the Federal Rules of Civil
Procedure. The notice of dismissal with prejudice shall be in the form attached
hereto as Exhibit A, and shall provide that the Court shall retain jurisdiction
over the Parties solely for the purpose of enforcing the terms of this
Settlement Agreement.
Section 2.Breach and Cure. In
the event that SDS or SLLC materially breaches a provision
of Section 4 of this Agreement, the nonbreaching, affected Party shall provide
such breaching Party with written notice thereof. The breaching Party shall have
a period of thirty (30) days from receipt of such notice in which to cure such
breach before the nonbreaching, affected Party shall be permitted to seek any
legal redress against the breaching Party.
Section 3.General
Provisions.
Section 3.1. Entire Agreement.
This Agreement supersedes any and all prior or contemporaneous negotiations,
correspondence, understandings or agreements of the Parties relating to the
subject matter hereof, whether written or oral, and all such other
understandings or agreements shall upon the effective date of this Agreement be
void and without further force or effect. No change, modification, addition or
amendment to this Agreement shall be valid unless in writing and duly executed
by all Parties, indicating intent to modify the Agreement.
Section 3.2. Notice. In the case
of any need to communicate with regard to this Agreement, such communications
shall be in writing and shall be directed to the following designated
individuals:
For
Sponge Tech Delivery Systems, Inc.:
Xxxxxxx
Xxxxxx, CEO
00 Xxxx
00 xx
Xxxxxx
Xxxxx
000,
Xxx Xxxx,
Xxx Xxxx, 00000
with a
copy to
Xxxxx
Xxxxxxx, Esq.
Xxxxxxx
Xxxxxx, LLP
000
Xxxxxxxxx Xxxxxx, 0xx Xx. Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
For Defendants Spongeables LLC and
Xxxxxxx Xxxxxxxx:
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Xxxxxxx
Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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Spongeables,
LLC
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co/
Spongeables, LLC
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0000
Xx Xxxxxxx Xxxx.
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0000
Xx Xxxxxxx Xxxx.
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Xxxxxxxxx,
XX 00000
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Xxxxxxxxx,
XX 00000
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Fax:
(000) 000-0000
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Fax:
(000) 000-0000
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with a
copy to
Xxxxx X.
Xxxx, Esq.
Xxxxx X.
Xxxx & Associates, PLLC
000 Xxxx
00xx
Xxxxxx, Xxxxx 0X Xxx Xxxx, XX 00000
Fax:
(000) 000-0000
For
Defendant Sponge Tech, Inc.:
Xxxxxx
Xxxxxxxxxxx
Spongetech,
Inc.
00000
Xxxxxx Xxxxxx Xxxxx Xxxx Xxxxxx, XX 00000 Fax: (000) 000-0000
Any
notice required or permitted by this Agreement shall be effective only if given
in writing and shall be considered to have been given when (i) delivered by
hand, (ii) sent by facsimile with completed transmission confirmed, provided
that a copy is mailed reasonably promptly by certified or registered mail,
return receipt requested, postage prepaid, or (iii) received by the addressee,
if sent by Express Mail, Federal Express, or other reputable express delivery
service (receipt requested), or by first class certified or registered mail,
return receipt requested, postage prepaid to the party to be notified at such a
Party’s address as set forth above, or as subsequently modified by the Parties.
Notices sent by Federal Express or other reputable express delivery service
(receipt requested) marked for next-day delivery shall be deemed received on the
next business day after sending.
Section 3.3. Governing Law. All
matters affecting the interpretation, form, validity, and performance of this
Agreement shall be decided under the laws of the State of New York without
regard to principles of conflicts of law. Enforcement of this Agreement and any
related future disputes between the Parties will be governed by New York law,
without reference to its conflict of laws rules, and the Parties consent to the
jurisdiction of a court of competent jurisdiction in the Borough of Manhattan in
the City of New York to resolve any disputes between the
Parties.
Section 3.4. Captions. The
captions in the Agreement are intended solely as a matter of convenience and for
reference and shall be given no effect in the construction or interpretation of
the Agreement.
Section 3.5. Severability of
Provisions. Should any part or provision of the Agreement be held
unenforceable or in conflict with the law of any jurisdiction, the validity of
the remaining parts or provisions shall be unimpaired.
Section 3.6. No Agency. At no time
shall any Party hold itself out to be the agent, employee, lessee, sublessee,
partner, or joint venture partner of another Party. Nothing in the Agreement
shall be construed to create any relationship between the Parties other than as
expressly set forth in this Agreement. The Parties shall not have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of each other or to bind each other with regard to any other
contract, agreement, or undertaking with a third party. Nothing in this Section
3.6 is intended to preclude Xxxxxxxx (who is the CEO of SLLC) from acting as an
agent or employee of SLLC.
Section 3.7. Construction Against
Waiver. No waiver of any term, provision, or condition of the Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed to
be construed as a further or continuing waiver of any such term, provision, or
condition of the Agreement; nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other
provision.
Section 3.8. Joint Drafting.
Counsel for the Parties participated in the negotiation and drafting of this
Agreement. The terms of this Agreement should not be construed either for or
against any Party based solely on the authorship of any particular term or
section.
Section 3.9. Execution of
Agreement. This Agreement may be executed in one or more counterparts,
and all counterparts so executed shall constitute one single and entire
Agreement, which shall be binding on the Parties hereto, notwithstanding that
the Parties may not be signatories to the original or the same counterparts. The
Parties may execute this Agreement, and exchange signature pages, by email PDF
or facsimile copies, and the Agreement shall be binding when each Party has
signed the Agreement and each Party has received a copy of the Agreement signed
by each of the other Parties. The Parties agree to provide original signed
copies of the Agreement promptly upon the written request of another Party, but
the delivery of original signed copies shall not be required for the Agreement
to be binding. Each Party that is an entity represents and warrants that it has
the right, power and authority to enter into this Agreement, and that the
persons signing for such entity Party below have the authority to do so. The
name and title of each person signing for each entity Party below shall be
clearly written in legible print below each signature.
Section 4.Other
Terms.
Section 4.1.
Spongeables agrees not to use the xxxx SPONGETECH® (the “Xxxx”) in connection
with the sale of any product or service for sponges infused with soap, body wash
and/or active ingredients including use of the Xxxx in any such advertisement,
packaging, or offer for sale. SLLC agrees not to use the Xxxx in connection with
the sale of any product or service for sponges infused with soap, body wash,
and/or active product ingredients that will cause dilution of the Xxxx or
knowingly cause injury to SDS’ business reputation. In addition SLLC agrees not
to use as marks SPONGETEK, SPONGETEC, SPONGTECH, SPONGTEC, SPONGTEK, SPNGTECH,
SPNGTEK, or SPNGTEC in connection with the above-described goods and
services.
The
forgoing expressly excludes any use of the trade name “SpongeTech, Inc.” by SLLC
to accurately identify the prior owner of rights or products or to identify the
source of products or technology developed by STI that are now owned by SLLC.
The foregoing also excludes any use of the Xxxx that is expressly authorized and
permitted by SDS by written agreement, and any use of“SpongeTech, Inc.” that may
be necessary for reporting requirements, for accounting purposes, and/or for
legal matters relating to the winding up of the affairs of STI.
SLLC
further agrees not to use any trademark in connection with its products,
services, advertisements, packaging, and offers for sale that is likely to cause
confusion, mistake or deception in the minds of the public with the Xxxx and
associated products that use the Xxxx.
It is
agreed as between the Parties that the trademarks SPONGEABLES, SPONGEABLE,
SPONGABLES, SPONGABLE, SPONGABL, SPNGBLE, SPONGELLE, SPONGEL, or SPONGE-GEL are
not confusingly similar to the Xxxx and that nothing herein prohibits or
restricts SLLC from continuing to use SPONGEABLES, SPONGEABLE, SPONGABLES,
SPONGABLE, SPONGABL, SPNGBLE, SPONGELLE, SPONGEL, or SPONGE-GEL (collectively
the “Spongeable Marks”) in connection with the sale of any product or service
for sponges infused with soap, body wash, and/or active product ingredients
including use of the tradename and trademark SPONGEABLES, SPONGEABLE,
SPONGABLES, SPONGABLE, SPONGABL, SPNGBLE, SPONGELLE, SPONGEL, SPONGE-GEL or
SPONGEGEL in any such advertisement, packaging, or offer for sale.
Section 4.2. SDS
agrees not to use the xxxx SPONGEABLES or any of the Spongeable Marks in
connection with the sale of any product or service for sponges embedded with
cleaner, soap, shampoo, wax, degreaser and/or active product ingredients
including use of SPONGEABLES or any of the Spongeable Marks in any such
advertisement, packaging, or offer for sale. SDS agrees not to use SPONGEABLES
or any of the Spongeable Marks in connection with the sale of any product or
service for soap infused sponges or for sponges embedded with cleaner, soap,
shampoo, wax, degreaser and/or active product ingredients that will cause
dilution thereof or knowingly cause injury to SLLC’s business
reputation.
Settlement
Agreement
Execution
Copy
(December
14, 2009)
5
The
foregoing also excludes any use of SPONGEABLES or any of the Spongeable Marks
that are expressly authorized and permitted by SLLC by written
agreement.
SDS
further agrees not to use any trademark in connection with its products,
services, advertisements, packaging, and offers for sale which is likely to
cause confusion, mistake or deception in the minds of the public with SLLC’s
xxxx SPONGEABLES or any of the Spongeable Marks and associated products that use
those marks.
It is
agreed as between the Parties that SDS’s SPONGETECH xxxx is not confusingly
similar to the xxxx SPONGEABLES or any of the Spongeable Marks and that nothing
herein prohibits or restricts SDS from continuing to use the Xxxx in connection
with the sale of any product or service for soap infused sponges for personal
use, including use of the Xxxx in any such advertisement, packaging, or offer
for sale.
Section 4.3. As
between SDS and SLLC, all right, title and interest in and to each of the
Parties’ respective trademarks (SDS’s SPONGETECH xxxx and SLLC’s SPONGEABLES
xxxx and Spongeable Marks) shall be and remain their respective sole and
complete property. SDS and SLLC recognize the value of the goodwill associated
with SDS’s SPONGETECH xxxx and SLLC’S SPONGEABLES xxxx and Spongeable Marks),
and that these marks have secondary meaning in the mind of the public, and that
these trademarks, and any registrations therefor, are good and valid. Neither
SDS nor SLLC shall contest or assist others in contesting the other’s rights or
interests in or to these trademarks or any other trademark that a Party may seek
to register which is substantially similar to the marks SPONGETECH or
SPONGEABLES (including the Spongeable Marks) in the United States or anywhere
else in the world . SLLC agrees not to seek any trademark registration(s) for a
xxxx that is substantially similar or confusingly similar with SDS’s SPONGETECH
xxxx in the United States or anywhere else in the world. SDS likewise agrees not
to seek any trademark registration(s) for a xxxx that is substantially similar
or confusingly similar with SLLC’s SPONGEABLES xxxx or any of the Spongeable
Marks in the United States or anywhere else in the world.
Section 4.4. This
Agreement shall be binding upon the Parties and their successors and
assigns.
Section 4.5. Each of
SLLC and SDS shall promptly notify the other of any apparently unauthorized use
or infringement by third parties of the other Party’s trademarks, and will
reasonably cooperate with the Party requesting assistance, at the requesting
Party’s expense, in an action at law or in equity undertaken with respect to
such unauthorized use or infringement. For avoidance of doubt, there is no
affirmative obligation on the part of SDS to actively monitor and/or search for
apparently unauthorized third-party use of the SLLC’s trademarks and SLLC shall
likewise be under no affirmative obligation to actively monitor and/or search
for apparently unauthorized third-party use of the SDS’s
trademarks.
Settlement
Agreement
Execution
Copy
(December
14, 2009)
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Section 4.6. STI
shall use reasonable efforts to complete the winding up of its affairs as
quickly as practicable, and shall provide SDS with an update of its efforts
within forty-five (45) days from the Effective Date. If additional time is
required by STI to wind-up its affairs, STI shall so advise SDS of actions taken
during the preceding 45-day period and shall provide SDS further updates as
mutually agreed with SDS until the winding up has been completed. Defendant STI
and SDS recognize that STI is listed as a “void” company with the Delaware
Secretary of State (SOS). Defendant STI shall take such further steps as may be
reasonably requested to cause STI to be listed as inactive, dissolved or other
similar designation with the Delaware SOS. Defendants SLLC and Xxxxxxxx hereby
covenant and agree that in the future neither will seek to form or register a
business entity containing the word SPONGETECH, SPONGETEK, SPONGETEC, SPONGTECH,
SPONGTEC, SPONGTEK, SPNGTECH, SPNGTEK, or SPNGTEC.
Section 4.7. SLLC and
STI agree that websites owned, operated or under the control of SLLC or STI,
shall not contain any of the following meta -tags: SPONGETECH SPONGETEK,
SPONGETEC, SPONGTECH, SPONGTEC, SPONGTEK, SPNGTECH, SPNGTEK, or SPNGTEC. SDS
agrees that websites owned, operated or under the control of SDS shall not
contain any of the following meta-tags: SPONGEABLES, SPONGEABLE, SPONGABLES,
SPONGABLE, SPONGABL, SPNGBLE, SPONGELLE, SPONGEL, or SPONGE-GEL. The Parties
further agree not to engage in typosquatting of the other’s trademarks – i.e.,
by registering, or causing or assisting a third party to register, a website
having as a uniform resource locator (url) containing other party’s trademark or
one of the above -listed variants of the other’s xxxx (e.g.,
spongeables[pejorative].com or [pejorative] xxxxxxxxxx.xxx).
Section 4.8. The
Parties agree that any breach of the undertakings set forth in Sections 4.1 or
Section 4.2, that is not cured in the period provided in Section 2, will be
deemed to result in immediate and irreparable damage to the other. In the event
of such an uncured breach, the breaching party acknowledges that there is no
adequate remedy at law. Accordingly, if a Party institutes an action or
proceeding to enforce the provisions of Sections 4.1 or 4.2, such party shall be
entitled to obtain, without the posting of any bond or security, such injunctive
or other equitable relief from a court of competent jurisdiction as may be
necessary or appropriate to curtail any such breach. The foregoing shall be in
addition to and without prejudice to such other rights as such party may
have.
Section 4.9. With
respect to an article entitled “Spongetech is all wet” that appeared in the New
York Post on September 22, 2009, SLLC and Xxxxxxxx shall send a letter of
clarification (the “Clarification Letter”) to the New York Post (with a copy to
SDS) in the form attached as Exhibit B hereto. SLLC and Xxxxxxxx shall send such
letter of clarification promptly after the execution of this Agreement by the
Parties, and in no event more than five (5) business days after the execution of
this Agreement by the Parties. SDS recognizes and agrees that SLLC and Xxxxxxxx
have no control whatsoever over what, if anything, the New York Post may or may
not do with the Clarification Letter. SDS agrees that it shall not use, and
shall not cause anyone to use, parts or portions of the Clarification Letter or
parts or portions of the text of the Clarification Letter for any purpose, and
that SDS shall not quote or further disseminate or distribute, and shall not
cause anyone to quote or further disseminate or distribute, the Clarification
Letter or its contents except in its entirety.
Settlement
Agreement
Execution
Copy
(December
14, 2009)
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Section 4.10. Neither
SDS nor Defendants will issue any press releases relating to this settlement
agreement unless such press releases are approved in advance by all of the
Parties.
Section 4.11. SDS has
represented that it is required to, and plans to, file this Settlement Agreement
with the U.S. Securities Exchange Commission, and that therefore it will become
a publicly available document.
Section 5.This
Agreement is entered into by the Parties for the purpose of compromising
disputed claims and avoiding the expense, inconvenience and uncertainty of
litigation. Nothing contained in this Agreement, and neither the execution of
this Agreement nor any consideration exchanged pursuant to this Agreement, shall
constitute, be deemed, or be treated by any Party for any purpose as an
admission of any fact, act, position, contention or allegation, or as an
admission of any claim, wrongdoing, liability or damages.
IN WITNESS WHEREOF, the
Parties have caused the Agreement to be executed as of the date written above
for these purposes.
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SpongeTech
Delivery Systems, Inc.
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By:
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Name
(Print):
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Title
(Print):
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Date:
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SpongeTech,
Inc.
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By:
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Name
(Print):
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Title
(Print):
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Date:
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Settlement
Agreement
Execution
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(December
14, 2009)
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Spongeables
LLC
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By:
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Name
(Print):
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Title
(Print):
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Date:
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Xxxxxxx
Xxxxxxxx
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Settlement
Agreement
Execution
Copy
(December
14, 2009)
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EXHIBIT
A
IN
THE UNITED STATES DISTRICT COURT
FOR
THE SOUTHERN DISTRICT OF NEW YORK
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SPONGETECH
DELIVERY SYSTEMS, INC.
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)
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Plaintiff
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) CIVIL
ACTION NO: 09 CV 8398 (PKC)
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v.
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SPONGETECH,
INC., SPONGEABLES, LLC.,
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and
XXXXXXX XXXXXXXX, Individually
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Defendants
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PLAINTIFF’S
NOTICE OF DISMISSAL WITH PREJUDICE
Pursuant
to Rule 41(a) of the Federal Rules of Civil Procedure, Plaintiff Spongetech
Delivery Systems, Inc. hereby gives notice that this action, and the claims
asserted therein, are hereby dismissed with prejudice with each party to bear
its own costs. The Court shall retain jurisdiction over the Parties solely for
the purpose of enforcing the terms of the Settlement Agreement dated December
14, 2009. The Court shall retain jurisdiction over the Parties solely for the
purpose of enforcing the terms of the Settlement Agreement dated December 14,
2009.
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Xxxxxxx
Savage, LLP
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By:
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_____________________
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Xxxxx
X. Xxxxxxx, Esq. (JDF-3433)
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A
Member of the Firm
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000
Xxxxxxxxx Xxxxxx, 0xx
Xx. Xxx Xxxx, XX 00000
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Tel:
(000) 000-0000
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Fax:
(000) 000-0000
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Attorneys
for Plaintiff Spongetech Delivery Systems,
Inc.
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Settlement
Agreement
Execution
Copy
(December
14, 2009)
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EXHIBIT B
[Spongeables
LLC Letterhead]
Editor-In-Chief
New York
Post
0000
Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX 00000-0000
Dear
Sir/Madam:
I am the
CEO of Spongeables, LLC, a Los Angeles based company that manufactures and sells
soap/shower gel (and other ingredients) infused in sponges using our
patent-pending technology.
The
purpose of this letter is to clarify certain statements that were made during a
telephone interview with a reporter from the New York Post and later attributed
to me in a September 22, 2009 article in the Post entitled "Spongetech is all
wet".
Spongeables,
LLC has never been and is not affiliated in any way with SpongeTech Delivery
Systems
Inc. This fact was subsequently reported on October 6, 2009 by the New York
Post.
I was
contacted by the New York Post reporter for an interview and spoke to her in my
capacity as CEO of Spongeables LLC. As I recall our conversation, I was asked a
general background question about sales by a company, like Spongeables, that had
been in business for about two years selling infused body wash sponges (e.g.,
infused with shower gel) in the United States. My comments were that such a
company could have sales from $5 to $10 million dollars a year.
The
statements attributed to me were not about SpongeTech Delivery Systems Inc. The
manner in which the statements were printed in the Post article may have created
the incorrect impression that I was speaking about SpongeTech Delivery Systems
Inc. and its sales, which I was not. I regret that the statements may have been
misconstrued or that unfavorable inferences or conclusions about SpongeTech
Delivery Systems Inc. may have been made. I have no personal knowledge regarding
sales by SpongeTech Delivery Systems Inc. or its finances.
Very
truly yours,
Xxxxxxx
Xxxxxxxx
Chief
Executive Officer
Spongeables,
LLC
Settlement
Agreement
Execution
Copy
(December
14, 2009)
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